The Institute of Directors has just played a wonderful hand, and in so doing may have started an important transition—from being perceived as being a nice club for well-to-do directors, to being a forthright influencer in the commercial world. In recent years, most professional bodies seem to have concentrated their efforts on recruitment, membership services and education. Some, including the Institute of Directors in New Zealand, have established a chartered director programme, in an effort to raise the level of professionalism across the director community. However, one important element has been missing, or at least not apparent, until now: lobbying.
The Institute seems to have emerged from the shadows however, by taking this tough stance on executive remuneration. While the move may not win many friends amongst those who frequent the top echelons of corporate power, it signals a return to the principles of the royal charter under which the organisation was formed. It also signals intent: to hold directors accountable and, hopefully, to commence an active lobbying initiative. That standards of professionalism be raised, lawmakers be influenced and directors be held to account bodes well for shareholders seeking to wrest back control of the companies that they own. It also bodes well for the community, because high company performance is an important contributor to economic growth and societal well-being.
Congratulations are due to the Institute. Simon Walker and his colleagues have made a bold move. Now we need to see more of this type of behaviour—from the Institute, and from the institutes in New Zealand, USA, Australia and elsewhere.
Thoughts on corporate governance, strategy and effective board practice; our place in the world; and, other things that catch my attention.